Saturday, March 23, 2013

Book: Adapt - Why Success Always Starts with Failure by Tim Harford

Tim Harford's book "Adapt" looks at the role of failure and adaptation in success, both at the corporate level and at the level of the individual.

I'm a big fan of Harford. He has an interesting BBC radio programme called More or Less, writes excellent everyday economics pieces for the Financial Times, and has given some great lectures which can be found on Youtube. Turning to the book, I initially felt a little let down due to some of the review quotes on the cover of the book which suggested that Adapt contained a great new theory and was "ground-breaking". It doesn't live up to the hyperbole in this respect but it is a very good book that highlights the important role of failure in the path to success and also discusses how to fail well. This is something we already know much about but Harford's torch of clarity lends a fresh, well researched perspective that makes the reader appreciate failure in a new light. All in all, very good.


Here are some key quotes from the book:

- The printing press was invented by Johannes Gutenberg, a man who changed the world utterly, and produced the Guternberg bible in 1455. But the Gutenberg Bible was a ruinous project that put him out of business. 

- At the dawn of the automobile industry, two thousand firms were operating in the United States. Around 1 percent of them survived. …Today, 10 per cent of American companies disappear every year. What is striking about the market system is not how few failures there are, but how ubiquitous failure us even in the most vibrant growth industries.

- Why are there so many failures in a system that seems to be so economically successful overall? It is partly the difficulty of the task. Philip Tetlock showed that how hard it was for expert political and economic analysts to generate decent forecasts, and there is no reason to believe that it is any easier for marketers or product developers to strategists to predict the future. …In a market economy, there is usually only room for a few winners. Not everyone can be one of them.

- While trial and error is fundamental to the way that markets work, it makes for a challenging approach to life. Who wants to grope her way to a successful solution, with her repeated failures in full view of the world? Who wants to vote for a politician who takes that approach, or promote a middle man whose strategy seems to be to throw around ideas and see what works? …Margaret Thatcher famously declared, “You turn if you want to. The lady’s not for turning.” Tony Blair was proud of the fact that he didn’t have a reverse gear. Nobody would buy a car that didn’t turn or go backwards, so it is unclear why we would think of these are desirable qualities in Prime Ministers.
….But whether we like it or not, trial and error is a tremendously powerful process for solving problems in a complex world, while expert leadership is not.

- Poker players explained to me that there’s a particular moment at which players are extremely vulnerable to an emotional surge. It’s not when they’ve won a huge pot or when they’ve drawn a fantastic hand. It’s when they’ve just lost a lot of money through bad luck (a “bad beat”) or bad strategy. The loss can nudge the player into going ‘on tilt’ – making overly aggressive bets in an effort to win back what he wrongly feels is still his money.
Quoting Kahneman and Tversky: ‘…a person who has not made peace with his losses is likely to accept gambles that would be unacceptable to him otherwise.”

- On Deal or no Deal: Unlucky choosers stood out. They were extremely unlikely to accept an offer from the Banker. Why? Because if they did, it would lock in their ‘mistake’. If they kept playing, there was a chance of some sort of redemption.

- The three essential steps (to successful adapting) are: to try new things, in the expectation that some will fail; to make failure survivable, because it will be common; and to make sure that you know when you’ve failed.

- As a Prussian general once put it, “No plan survives first contact with the enemy.” What matters is how quickly the leader is able to adapt.

- ... make failure survivable : create safe spaces for failure or move forward in small steps.  ..the trick here is finding the right scale in which to experiment: significant enough to make a difference, but not such a gamble that you’re ruined if it fails. And third, make sure you know when you’ve failed, or you will never learn. …this last one is especially difficult when it comes to adapting in our own lives.

- The best failures are the private ones that you commit in the confines of your room, alone, with no strangers watching. Private failures are great.

- Pluralism matters because life is not worth experiencing without new experiences – new people, new places, new challenges. But discipline matters too: we cannot simply treat life as a psychedelic trip through a random series of novel sensations. We must sometimes commit to what is working; to decide that the hobby we are pursuing is worth mastering; that it’s time to write that novel, or strive for that night-school degree, or maybe get married. Equally important: sometimes we need to make the opposite kind of commitment, and decide that the toxic job and the toxic boyfriend are simply not worth the amount of life they cost.

- It’s one thing to be committed; it’s another to trap ourselves unnecessarily.  

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